Daily Archives: March 17, 2011

Laws the GOP should pass:Compromise Bill #2 Let’s talk energy policy

When I planned this series I had originally intended to deal with nuclear energy this week. However despite the fact that it still remains the safest, cleanest, cheapest form of energy at present…I just don’t get the feeling people are willing to listen to a rational argument just yet. So I will let emotion die for a couple of weeks, and a return to sanity to prevail.

In the mean time I am going to stick to my theme of energy policy and advocate the following compromise:

We up the federal gas tax by 10 cents a gallon for a lift on all bans for drilling in all areas within the U.S (and lift useless red tape on refineries).

I can just hear the groans from both sides.
Let me deal with the leftist groans first. Now for this I would also put into the bill that if you cause any ecological problems the company responsible will pay not only for the full cleanup and damage to the local economy, but pay fines equal to twice what the ecological and economic damage is. If you don’t think they’ll put the best goddamn safety features they can think of in place to avoid that kind of destruction to their bottom line, you’re crazy. Further keep in mind it was your crazy liberal environmental whining that made us put platforms so far out from the shore line. If the platform in the gulf coast had only been a few hundred feet below sea level it would have been plugged within days if not hours. But no, the environmentalists drove the platforms so far off shore that it was thousands upon thousands of feet down and it was impossible to reach and fix. I think we should go back to drilling close to shore.
Oh and just shut up about your complaining about more drilling in Alaska. The area they want to drill in isn’t some pristine piece of beauty. It’s tundra. Boring, plain, ugly tundra. And the caribou like the heat from the pipelines. Shut up about Alaska drilling. Compared to what we’re doing right now it’s perfectly safe.

Now to deal with the complaints from conservatives.
First they’re going to whine that another 10 cents a gallon is more than the American public can afford. This would ignore the fact that I just radically increased the amount of oil available and just the news of this, as I recall from my knowledge of supply and demand, will probably drive back the cost of oil so much that gas will probably be at least 15 if not 50 cents per gallon cheaper. It pretty much pays for itself in the short run.
But it’s in the long run that it gets better. So much better.

Thomas Friedman (a man with whom I usually disagree with as I find his analysis of certain fields overly simplistic or just plain foolish, but in this case makes some very valid points) in his book Hot, Flat, and Crowded makes some excellent points about why we do need to get away from oil. First he points out that most of the money we spend on oil goes to the Middle East where it goes to fund tyranny and terrorism. He presents a clear case that the more money most countries get from oil the less free and more tyrannical they are (we don’t really run this risk in the US because even if we opened up every potential field, oil would remain a small portion of the economy whereas in these countries it is the single largest sources of income). That for every gallon of gas you buy a few cents goes to fund terrorism (even if the oil it was made from came from the US because it’s the amount of oil consumed that fixes the prices, no matter where it’s bought or mined, and if you don’t buy oil from the Middle-East someone else will, and it’s your buying of oil that makes it have a high price). Now I will go even further and point out that for every dollar a terrorist has, I will almost bet you we have to spend at least $5 (probably a lot more) in military, Homeland security, DOJ, state and local police (this list could go on, not to mention the damage costs if the terrorists succeed) to combat what that one dollar could do.
A ten cent tax hike would drive people to consume less gas. It would force car companies to make cars that were more fuel efficient. I’m sorry but I have no doubt that cars could easily be 10-20% more efficient tomorrow if the public demanded it of car companies. This would in turn cause even less money, if only in a slight amount, going to fund these heinous acts. (Just ask where Kaddafi would be right now if he didn’t have oil money to fund his military.)

But Friedman points out that a tax hike has a second benefit beyond lowering the wealth of the worst nations on Earth. If you raise the cost of gas you make it easier for alternate fuel systems to come in.

(I’m going to simply use numbers here to make it easier, so don’t quote my numbers, quote the premise behind them.)

Let’s say that the bare minimum a gallon of gas is ever going to reach ever again is $2.00. That means any other form of energy for powering a car needs to be $1.99 for how much energy a gallon of gas creates to be efficient. Right now, that’s not the case. Yes, electric cars actually are more inefficient because the electricity that powers them is likely from a source that per mile you’re probably paying a little more. However, if you put another 10 cent tax on gas then to be efficient you have to reach $2.09. That doesn’t sound like a lot, but from a technical standpoint that’s a massive difference.

Now let’s say deal with, oh I don’t know, solar cells. (I could pick any form of energy production because the economic rules that apply here are the same but I wanted to focus on one possible form). Let’s say that you can get solar cell technology down to the $2.09 level so that it can be put on hybrids and electric cars or be put into production at plants to create energy to pump into those cars. It is a lot easier to get the technology down to the $2.09 level than the $1.99 level for it to become economically viable for even a small market (electric cars aren’t economically viable yet, people are paying more for a status symbol). But here is the interesting thing, once it become economically viable for a small market a funny thing happens called the economy of scale. Once it become economically viable on a small scale, everyone will buy it and the cost for producing the technology will drop like a rock and what was once $2.09 will suddenly drop to $1.50 at that point it is actually affordable to put those solar cells on the roof of your house thus lowering you monthly electric bills…and the electric bills of every company you buy stuff from which either means lower prices or they hire more people, both are good for the economy. Oh and as this becomes a more profitable market more R&D will be done in this field and the price will go even lower…this in turn will have a fascinating effect of lowering costs in all fields, so actually in this particular case a tax hike could result in lower prices. (And it means even less money for those oil nation tyrannies.) All we need to do is get over that initial hump of beating the most cost effective current source of energy, i.e., oil.

And for a while we’ll have more tax revenue coming in to pay off that pesky debt. Will there be some economic hurt in the short run? Yes, but not in the long run, which is always more important. And hey that extra oil drilling should defer a lot of the initial costs.

Democrats will get their tax hike. We get the drilling we want. A perfect compromise!

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